Citation NR: 9606759
Decision Date: 03/15/96 Archive Date: 03/26/96
DOCKET NO. 94-29 467 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in Manila,
Philippines
THE ISSUE
Entitlement to a waiver of the recovery of an overpayment of
dependency and indemnity compensation benefits in the amount
of $648.
ATTORNEY FOR THE BOARD
James R. Siegel, Counsel
INTRODUCTION
The veteran served on active duty for more than nine years,
and was discharged in October 1955. He died in January 1976.
The appellant is the mother of the veteran's illegitimate
son.
This matter comes before the Board of Veterans' Appeals
(Board) on appeal from a February 1994 decision of the
Committee on Waivers and Compromises which denied the
appellant's claim for a waiver of the recovery of the
overpayment of dependency and indemnity compensation benefits
at issue in this appeal on the basis that her actions
constituted bad faith. Accordingly, a waiver of the recovery
of the overpayment of dependency and indemnity compensation
benefits was denied.
CONTENTIONS OF APPELLANT ON APPEAL
The appellant contends that a waiver of the recovery of the
overpayment of dependency and indemnity compensation benefits
at issue is warranted. She asserts, in effect, that the
overpayment was not the result of her bad faith. She claims
that the veteran's son was not in school because he had been
erroneously suspected of being involved in a stabbing
incident. She argues that relatives of the victim had
threatened her son’s life, and that the best way for him to
protect himself was to withdraw from school. She maintains
that her son did not report this to her and that, therefore,
she was unable to notify the Department of Veterans Affairs
(VA).
DECISION OF THE BOARD
The Board, in accordance with the provisions of 38 U.S.C.A.
§ 7104 (West 1991 & Supp. 1995), has reviewed and considered
all of the evidence and material of record in the veteran's
claims file(s). Based on its review of the relevant evidence
in this matter, and for the following reasons and bases, it
is the decision of the Board that the weight of the evidence
supports the claim that the overpayment was not due to fraud,
misrepresentation or bad faith on the part of the appellant
and, accordingly, a waiver of the recovery of the overpayment
at issue in this appeal is not precluded on that basis.
FINDINGS OF FACT
1. The appellant had been in receipt of dependency and
indemnity compensation benefits on behalf of the deceased
veteran’s illegitimate son since January 1976.
2. She was notified in January 1993 that payments based on
his school attendance beyond the age of 18 would commence on
his 18th birthday in January 1993 and would continue until
November 1, 1996.
3. The veteran’s son dropped out of school on July 8, 1993,
but the appellant continued to receive a monthly payment of
$162 from VA based upon his attendance of school through
November 1993, thereby resulting in an overpayment to her in
the amount of $648 for the months of August through November
1993.
4. The appellant was not effectively informed that she had
to notify the VA of any change in her son’s school
attendance.
CONCLUSION OF LAW
The overpayment of dependency and indemnity compensation
benefits in the amount of $648 was not due to fraud,
misrepresentation or bad faith on the part of the appellant.
38 U.S.C.A. §§ 5107, 5302 (West 1991); 38 C.F.R. § 1.965(b)
(1995).
REASONS AND BASES FOR FINDINGS AND CONCLUSION
The initial question before the Board is whether the
appellant has submitted a well-grounded claim as required by
38 U.S.C.A. § 5107. The United States Court of Veterans
Appeals (the Court) has held that a well-grounded claim is a
plausible claim, one which is meritorious on its own or
capable of substantiation. Murphy v. Derwinski, 1 Vet.App.
78 (1990). In this case, the appellant’s assertions
concerning the factors surrounding the creation of the
overpayment are sufficient to conclude that the claim for
waiver is well grounded. Proscelle v. Derwinski, 2 Vet.App.
629 (1992); Espiritu v. Derwinski, 2 Vet.App. 492 (1992),
King v. Brown, 5 Vet.App. 19 (1993). No further development
is necessary in order to comply with the duty to assist
mandated by 38 U.S.C.A. § 5107.
The appellant had been in receipt of dependency and indemnity
compensation benefits on behalf of her son since the
veteran’s death in January 1976. A request for Approval of
School Attendance form dated December 1992 is of record.
This reflects that the appellant's son, who was born in May
1975, began to attend Samar College in October 1992, and his
expected date of graduation was October 1996.
By award letter dated in January 1993, the appellant was
informed that she had been awarded dependency and indemnity
compensation benefits on behalf of her son, effective January
1993. She was notified that the payments were based on his
school attendance until November 1, 1996.
An attachment (VA Form 21-8765) to the above award letter
provided the appellant with notice that benefits might be
paid for a child until the child became 18, or until the
child became 23 if the child was in school taking an approved
course of instruction. She was instructed to notify the VA
immediately if there were any change in any condition
affecting her right to continued payments, such as marital,
dependency and income changes. The appellant was also
advised that failure to notify the VA immediately of these
changes would result in an overpayment which was subject to
recovery.
In August 1993, Samar College advised VA that the appellant's
son had discontinued his studies on July 8, 1993.
By award letter dated December 1993, the appellant's award
was terminated, effective August 1993, based on the fact that
her son had discontinued his studies on July 8, 1993.
The overpayment in this case arose as a result of the fact
that the appellant continued to receive dependency and
indemnity compensation benefits based on her son’s attendance
at school after he withdrew from classes.
The law precludes waiver of recovery of an overpayment or
waiver of collection of any indebtedness where any one of the
following elements is found to exist: (1) Fraud, (2)
misrepresentation, or (3) bad faith. 38 U.S.C.A. § 5302.
In applying this single standard for all areas of
indebtedness, the following elements will be considered, any
indication of which, if found, will preclude the granting of
waiver: (1) Fraud or misrepresentation of a material fact;
(2) Bad faith. This term generally describes unfair or
deceptive dealing by one who seeks to gain thereby at
another's expense. Thus, a debtor's conduct in connection
with a debt arising from participation in a VA
benefits/services program exhibits bad faith if such conduct,
although not undertaken with actual fraudulent intent, is
undertaken with intent to seek an unfair advantage, with
knowledge of the likely consequences, and results in a loss
to the government. (3) Lack of good faith. Absence of an
honest intention to abstain from taking unfair advantage of
the holder and/or the Government. 38 C.F.R. § 1.965(b).
The appellant concedes that she failed to notify VA promptly
of her son’s withdrawal from school. The question is whether
this failure is excusable. For the reasons set forth below,
the Board finds that her actions did not constitute bad faith
and, therefore, waiver of recovery of the overpayment is not
precluded on that basis.
As noted above, the appellant was never specifically provided
with notice of the fact that she was supposed to report
immediately to VA any change in her child’s school
attendance. She was only informed that benefits could be
paid for a child after he became 18 years old if he was in
school. The appellant claims that her son did not promptly
tell her that he had withdrawn from school. The only “act”
the appellant committed in this case was her failure to
report promptly her son’s withdrawal from school. There is
no indication that she was aware of her duty to report her
son’s withdrawal from school and that she intentionally
withheld such information from the VA in order to obtain some
advantage. In light of the fact that the information sent to
the appellant was inadequate, the Board finds that her
actions in the creation of the indebtedness do not constitute
bad faith. Thus, waiver of recovery of the overpayment is
not precluded on that basis.
ORDER
Waiver of recovery of an overpayment of dependency and
indemnity compensation benefits is not precluded by a finding
of fraud, misrepresentation or bad faith. To this extent,
the appeal is granted.
REMAND
In view of the Board's finding that the overpayment was not
due to fraud, misrepresentation or bad faith on the part of
the appellant, it still must be determined whether recovery
of the overpayment may be waived under the standard of equity
and good conscience. Since this issue was not adjudicated by
the RO, the principles of due process of law require that the
RO be afforded an opportunity to review this matter.
The Board notes that the most recent financial status report
is more than two years old. A current one should be obtained
in order for the VA to comply with the duty to assist the
appellant mandated by 38 U.S.C.A. § 5107.
Under the circumstances of this case, the Board finds that
additional development of the record is required.
Accordingly, the case is REMANDED to the RO for action as
follows:
1. The RO should obtain a current
financial status report from the
appellant. She should accurately list
all her assets, liabilities, monthly
income and monthly expenses.
2. Thereafter, the RO should adjudicate
the issue of whether recovery of the
overpayment at issue in this appeal would
be against equity and good conscience.
3. If the decision remains adverse, the
RO should prepare a Supplemental
Statement of the Case which summarizes
the evidence and sets forth the governing
law and regulations, including
38 U.S.C.A. § 5302 (West 1991) and
38 C.F.R. § 1.965(a) (1995).
The appellant should be given an adequate period of time in
which to respond to the Supplemental Statement of the Case.
Thereafter, the case should be returned to the Board for
further appellate consideration if otherwise in order.
D.P. DEAN
Member, Board of Veterans' Appeals
The Board of Veterans' Appeals Administrative Procedures
Improvement Act, Pub. L. No. 103-271, § 6, 108 Stat. 740, 741
(1994), permits a proceeding instituted before the Board to
be assigned to an individual member of the Board for a
determination. This proceeding has been assigned to an
individual member of the Board.
NOTICE OF APPELLATE RIGHTS: Under 38 U.S.C.A. § 7266 (West
1991 & Supp. 1995), a decision of the Board of Veterans’
Appeals granting less than the complete benefit, or benefits,
sought on appeal is appealable to the United States Court of
Veterans Appeals within 120 days from the date of mailing of
notice of the decision, provided that a Notice of
Disagreement concerning an issue which was before the Board
was filed with the agency of original jurisdiction on or
after November 18, 1988. Veterans’ Judicial Review Act, Pub.
L. No. 100-687, § 402, 102 Stat. 4105, 4122 (1988). The date
that appears on the face of this decision constitutes the
date of mailing and the copy of this decision that you have
received is your notice of the action taken on your appeal by
the Board of Veterans’ Appeals. Appellate rights do not
attach to those issues addressed in the remand portion of the
Board’s decision, because a remand is in the nature of a
preliminary order and does not constitute a decision of the
Board on the merits of your appeal. 38 C.F.R. § 20.1100(b)
(1995).
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